London – 14 March 2025 - Vanquis Banking Group plc (‘the Group’ or ‘Vanquis’), the specialist bank, today published its results for the twelve months to the end of December 2024.
Ian McLaughlin, Chief Executive Officer, commented:
“2024 was a pivotal year in the turnaround of Vanquis. We have made good progress implementing the changes required to position the business for sustainable future growth, despite substantial headwinds. We addressed underlying structural issues, simplified our operating model, refreshed our strategy, expanded our product range, and are on track to deliver our technology enhancements.
"Significant progress has been made on our cost saving commitments across the year, with over £64 million of savings achieved by the end of 2024, exceeding our £60 million target. We are set to deliver an additional commitment of £15 million by the end of 2025. Our technology transformation programme, Gateway, is due to complete by mid-2026, providing us with a scalable, digital-first platform to support growth and delivering an additional £23-28 million in cost efficiencies.
"Vanquis plays an important role in UK banking. The customers we serve have demonstrated financial resilience, our underlying credit quality has improved and we have achieved greater clarity on cost of risk across portfolios. With this backdrop, the Group returned to gross customer interest earning balance growth in 4Q24.
“The foundations laid this year through our targeted strategies for efficiency and our commitment to long-term, profitable growth means we remain on track to deliver low single-digit return on tangible equity (ROTE) in 2025. The headwinds we have faced mean we now expect to achieve our goal of sustainable mid-teens ROTE in 2027, with double-digits ROTE delivered in 2026.
“I am proud of the hard work put in by all our colleagues over this challenging period. While the transformation continues, I am confident that 2024 will be remembered as the year we repositioned Vanquis for success."
Executive Summary
Deliberate actions were taken in 2024 to position the Group for sustainable profitable growth in 2025.
- Balance sheet review: Adjusted loss before tax of £(34.8)m (2023: profit of £17.3m) was impacted by the Vehicle Finance Stage 3 receivables review in 1H24, completed in 2H24, along with one-off items, resulting in a loss of £(31.7)m. These actions have created a cleaner and lower risk balance sheet, giving greater clarity to the cost of risk across portfolios.
- Complaints: Complaint costs rose 66% to £47.4m, with Financial Ombudsman Service (FOS) fees increasing £(16.7)m to £(24.8)m, driven by an increase in unmerited Claims Management Company (CMC) claims, weighing on performance.
- Balance growth: Managed new business growth accordingly, resulting in a 4% decline in gross customer interest-earning balances to £2,308m. However, balances increased by 2% in 4Q24.
- Cost efficiencies: Delivered £64.3m of transformation cost savings by the end of 2024 and on track for an additional £15m of committed savings by the end of 2025.
- Resilient funding: Retail funding rose to 92.1% (2023: 83.7%), reinforcing the Group’s strong liquidity position and deepening customer engagement.
- Robust liquidity and capital: The Group remained highly liquid, with a Liquidity Coverage Ratio (LCR) of 359% (2023: 1,263%) and a Tier 1 ratio of 18.8% (2023: 19.9%), ensuring sufficient capital for future growth.
- Clear financial trajectory: On track to deliver low single-digit ROTE in 2025. Now expect to achieve sustainable mid-teens ROTE in 2027 and double-digit ROTE in 2026.
- Vehicle Finance commission disclosures: Vanquis did not participate in discretionary commission arrangements (DCAs). The future application of the Court of Appeal Judgment remains highly uncertain, but Vanquis believes its position is differentiated on a number of grounds versus the three cases subject to the Judgment. In accordance with IAS37, the Group has not provided for this matter. From January 2013 to October 2024, c.10% of the historical Vehicle Finance commission payments to intermediaries were to dealer brokers, subject to the Judgment.
- Moneybarn goodwill write-off: Statutory loss before tax of £(136.3)m (2023: £(12.0)m) included a £(71.2)m (2023: £nil) goodwill write-off related to Moneybarn. This does not impact the Group’s capital position and is not connected to the Vehicle Finance Stage 3 receivables review or the Court of Appeal judgment regarding commission disclosures. The Group plans to moderate new business growth in Vehicle Finance while investing in and developing a new IT platform for Vehicle Finance as part of the Gateway technology transformation programme, and prioritise growth in Second Charge Mortgages and Credit Cards in the near term.